Missouri Bill Would Preserve Tax Break for Car Trade-Ins

Missouri lawmakers on Friday acted to preserve a tax break for trading-in multiple vehicles, although revenue officials say they never stopped offering it.

Senators voted 29-0 Friday to send a bill to Republican Gov. Mike Parson that would ensure people and businesses can continue getting a discounted sales tax on a new vehicle after trading-in multiple used cars, boats and other vehicles.

Revenue officials for years allowed reduced sales taxes on the price of new cars, minus the value of used trade-ins.

But the Missouri Supreme Court in June ruled that the practice goes against state law . Judges decided the tax break only applies to one-to-one trade-ins.

Despite the ruling, Revenue Department spokeswoman Anne Marie Moy said the agency has continued to allow sales tax discounts for multi-vehicle trade-ins. She said that’s because the department needs to change its regulations to comply with the court decision, and rule changes can take weeks or months to implement.

Parson had called the Republican-led Legislature back to work this week for a special session to undo the Supreme Court’s ruling, saying the legislation was needed to ensure no Missourians lost out on the tax break.

Although the measure passed with bipartisan support, both Democratic and Republican lawmakers questioned the urgency of the issue and why it couldn’t wait until they’re set to return for their annual five-month session in January.

“Not only have we been breaking the law, but it would create an unnecessary financial burden on many Missouri taxpayers,” Parson said.

After the bill passed the House, the chamber’s Minority Leader Crystal Quade told reporters that Democrats are concerned “that we’re spending tens of thousands of dollars on an issue that is not an emergency, when we have true emergencies that we should be talking about.”

Black lawmakers called on Parson to expand the special session to allow them to address gun violence in the state following a string of recent child homicides in St. Louis. Parson said that needs to be handled during lawmakers’ regular session.

On Friday, he pushed back against critics who questioned why he pushed for action on tax breaks instead of gun violence.

“This does not compare to the violent crime that’s going on in our state, nor would I compare it to that,” Parson said. “It’s about doing the right thing.”

It’s unclear exactly how many people and businesses use the vehicle sales tax break for multiple trade-ins.

The Department of Revenue doesn’t have data on the exact number of multi-vehicle trade-ins each year and the dollar amount of discounts received. But of roughly 140,000 trade-ins that occur each year, the agency estimates that multi-vehicle trades account for 6%-10%, Moy said. That amounts to an estimated 8,400 to 14,000 multiple car trade-ins per year.